Treasury Buyback Boost Sends Bitcoin to Two-Month High
The US Treasury Department's announcement of expanded buyback operations for longer-dated government bonds sparked a sharp rally in Bitcoin, sending its price to a two-and-a-half-month high. The move, which doubles the per-operation cap on 10- to 30-year securities from $2 billion to $4 billion, has led to a cascade of short liquidations worth $3.1 billion over just two days.
The price surge caught many traders off guard, with Bitcoin hitting an intraday peak of $72,408 on August 20. This represents a gain of nearly 15% from the Monday open and recovers ground lost during a sharp June 2 flash crash that knocked BTC from around $71,765 to $67,895.
As prices climbed, leveraged trading desks were forced to buy back Bitcoin they had shorted, triggering a self-reinforcing cycle known as a short squeeze. This led to the largest single-day short liquidation in crypto market history on August 19, with total crypto short liquidations reaching $3.1 billion across both days.
The influx of institutional money into spot exchange-traded funds (ETFs) also picked up pace, with US spot Bitcoin ETFs recording their largest single-day inflow since May at $517.19 million on August 19. Eight out of twelve funds posted positive flows, with BlackRock's IBIT leading the way.